E-Waste and the Supply Chain: Helping the Environment Boosts Business Profits, Too

In order to make manufacturing a sustainable process, companies must green their supply chains by sustainably sourcing materials, reducing the carbon footprint of factories and transportation, and properly disposing of old products.

When you pick up your smartphone or turn on your TV, you probably don’t think about the parts and labor it took to create the device. Yet everything we consume today, from printers to purses, has a supply chain behind it. Plastic casings come from fossil fuels, silicone microchips from sand, and copper wires that started in mines, are a few examples. Once drawn from the earth, these raw materials are catalyzed and manufactured into components, which, in turn, are assembled to make the finished products we purchase.

In order to make manufacturing a sustainable process, companies must green their supply chains by sustainably sourcing materials, reducing the carbon footprint of factories and transportation, and properly disposing of old products. Electronics, which includes computers, mobile devices, televisions, projectors, and printers, to name just a few, are both energy-intensive to manufacture and in high demand across the globe. The sheer volume of electronics brings to the fore the urgency of the need for improved environmental measures. For example, the amount of water required to create a laptop could wash about 70 loads of laundry, according to one National Geographic estimate. Another UN study found that it takes 530 pounds of fossil fuels, 48 pounds of chemicals, and 1.5 tons of water to produce one desktop computer.

The E-Waste Crisis

The sustainability issue is made more pressing by the pace at which consumers and companies are cycling through electronics. By 2016, the number of mobile devices on the planet is projected to outnumber people. Americans replace their cell phones every two years, throwing away an estimated 130 million cell phones into landfills each year, according to a National Public Radio (NPR) report. Cell phone disposal generates 65,000 tons of toxic waste.

The electronic waste (e-waste) problem extends well beyond mobile phones. UNEP has estimated that between 20-50 million metric tons of e-waste are thrown away each year. The EPA estimates that only about 10-18 percent of e-waste in America is recycled; e-waste is often cited as the “fastest-growing municipal waste stream in America.” In the US alone, more than 130,000 computers are thrown away daily, according to the BBC. Recycling all of the cell phones that are thrown away each year would yield “75 pounds of gold, 772 pounds of silver and 35,274 pounds of copper,” according to NPR.

Backyard Recycling: The Easy Way Out

The proper recycling of e-waste, which is laden with toxins including cadmium and mercury, is costly. Seeking to profit by selling shipping containers of e-waste, some recyclers have turned to "backyard recycling," the illegal dumping and hazardous tear-down of electronics in the developing world. E-waste is exported to developing countries including Ghana, Nigeria, Pakistan, India, and China. There, products are either re-sold in their entirety or scrapped for parts.

Backyard recycling comes with heavy environmental costs. “Crude recycling processes can emit pollutants that contaminate the air, water, and soil,” according to a recent Yale University study. “For instance, copper wire is often pulled from the old computers and the insulation burned off, emitting dioxins and other chemicals.” The BBC reported that the ground in Guiyu, a hotbed of e-waste recycling in China, “has been found to be so saturated with heavy metals such as lead, chromium, and tin that groundwater has become undrinkable.” This situation does not even touch on the human toll taken on the people working with e-waste, those exposed to toxins on a daily basis.

Momentum in Regulation

The cascading amount of e-waste, and the environmental and health problems due to the toxicity of this waste, has reached levels that can no longer be ignored. Legislation such as Restriction on Hazardous Substances (ROHS); Registration, Evaluation, Authorization and Restriction of Chemical substances (REACH) legislation, and Waste Electrical and Electronic Disposition (WEEE) continues to drive changes leading to more sustainable supply chains. These regulations have helped companies become more aware of the importance of responsible reverse logistics, which is the return flow of products from the consumer back to the manufacturer or retailer either for service and warranty repair or for disposal.

The Added Complexity of Data Wiping

Careful planning and attention to detail is critical for corporations when they design and implement reverse logistics supply chains. While individuals can drop off their old laptops at a retailer’s drop box for recycling, businesses not only have to abide by regulations dictating the proper recycling of e-waste, but in specific cases may also be subject to data wiping mandates that regulate the disposal of electronic equipment containing sensitive data.

Most technology, be it the hard drive of a computer or a doctor’s old pager, contains sensitive information. Businesses in the financial, medical and government industries, among a few others, must abide by regulations dictating safe data handling, wiping, and any component disposal and destruction. This requirement necessitates the use of specialized laboratories that have industry-recognized security systems, data erasure, shredding, and are accredited to perform very specific, secured destruction methods. These specialized laboratories then provide the required certificate of proper destruction and disposal. As a result, choosing the right disposition methods, and especially the best reverse supply chain partners, is a critical component to the proper disposal of electronics, as well as to successful sustainability management programs.

Good for Planet and Pocketbook

Beyond legal compliance, it is in a company’s financial interest to determine the degree to which the subcomponents of an end-of-life product could be harvested, or re-marketed. Today’s manufacturers are operating on ever-slimmer margins and tight inventory controls. Reverse logistics that include quality-based and market appropriate opportunities for secured component remarketing can provide new margin improvements. Some electronics can be refurbished and remarketed in their entirety, such as TVs, gaming devices, computers, and mobile phones, among others. In other situations, components of electronic devices unable to be refurbished can be harvested, tested, and remarketed as refurbished, such as a hard drive, processor, or a screen. Those components and devices that cannot be reused can be safely wiped of their data, shredded, and disposed of in an environmentally-aware manner – in some cases even at a zero-landfill level.

Proper value assessment, handling, refurbishing, and remarketing electronics requires a specialized skill set that includes deep market and product knowledge in addition to accredited, high-tech laboratories, and a secure reverse supply chain. Matching the proper parts, testing, and certification requirements with the components and proper market opportunities and then ensuring quality, security, traceability, and best pricing requires understanding market values at specific points in time. Additionally, it is essential that the reverse supply chain partner also have the experience and knowledge necessary to ensure adherence to the numerous certification standards and sourcing requirements so that the product can be appropriately targeted for remarketing as refurbished through reputable channels. Balancing corporate strategies can be more complex than it may seem at face value, but, as departments and businesses are increasingly focused on their core strengths, partners with complementary core strengths are seeing an increase in requests for reverse logistics service programs that can meet these goals and ease tight margins. Maximizing return on investment (ROI) means turning to those along the supply chain with the specialized, accredited, and agile expertise demanded in a reverse process.

The Greening of the Supply Chain

Overall, the recycling and reusing or refurbishing of materials has become more commonplace today. Businesses have actively increased their environmental sustainability goals, whether due to corporate value analyses or due to legislation enforced by governing bodies. Having a forward-thinking environmental sustainability program is a mark of good business and environmental strategies. In terms of finances, this development benefits ROI, through improved brand perception and savvy reverse logistics management.

Beyond good business, greening the supply chain is everyone’s issue. As corporate responsibility increases, the toll on the human and natural environment, brought on by backyard recycling and throwing devices into landfills, will be eased. Businesses’ mining demands will no longer be limited to the natural environment, but to existing devices containing the right components and raw materials. Reverse logistics is not a new phenomenon though, and what we are seeing are the benefits as this once less common business process matures and expands across enterprises. The positive gains go beyond improved supply chains, and extend to improve our ability to be true stewards of our environment.

About the Author

Lisa Cairns joined the Smith network of businesses in 2001 as a Technology Strategist and became the Chief Strategy Officer for a Smith subsidiary the following year. More recently, Lisa has been involved with various strategic marketing projects for the Smith network and is the Senior Contributor for MarketWatch. Prior to joining Smith, Lisa was an Assistant Professor at Texas A&M University. Lisa received her Ph.D. (1998) and A.M. (1992) from The University of Chicago, during which time she was awarded a National Science Foundation Doctoral Dissertation Research Improvement Grant. She holds a B.A. from Hofstra University, 1988, where she was the first woman undergraduate to receive a Fulbright Scholarship.